Gold Has Biggest Loss of 2014 as Portugal Concerns Ease

Portuguese 10-year government bonds were set for the
biggest two-day advance in a month on speculation that Portugal
would contain financial woes at one of its banking groups. The
Standard & Poor’s 500 Index added as much as 0.6 percent after
Citigroup Inc. reported profit that topped analysts’ estimates.

The drop comes after gold capped the longest run of weekly
gains since 2011, partly as missed payments on notes by a parent
company of Portugal’s second-biggest bank renewed concern that
Europe hasn’t resolved its debt crisis. EU spokesman Simon
O’Connor said July 11 that the country has taken steps to shore
up its financial system. Goldman Sachs Group Inc.’s Jeffrey
Currie reiterated his outlook for lower bullion prices as
confidence increases in the economic recovery and inflation
remains tame.

“A strong stock market and some stability in the EU” are
pressuring gold, Peter Thomas, a senior vice president at Zaner
Group LLC in Chicago, said in a telephone interview. “A lot of
people were looking at Portugal as a domino effect, and as we
saw, O’Connor prevailed and it didn’t have a significant
impact.”

Gold futures for August delivery fell 2.3 percent to settle
at $1,306.70 an ounce at 1:50 p.m. on the Comex in New York, the
biggest loss for a most-active contract since Dec. 19.

Trading was 66 percent above the average for the past 100
days for this time of day, data compiled by Bloomberg show.

Price Outlook

Goldman’s Currie reiterated his outlook for prices to drop
to $1,050 an ounce by year-end, even as hedge funds add to their
bullish holdings for a fifth straight week and assets in
exchange-traded products advance.